 Rezaul Karim Chowdhury, EQUITYBD 

LDC & Trade facilitation: Who gets the Benefits?  LDC share in global trade is reducing ( 3% to 1.18% ) after WTO regime. It is mainly the advance developing countries (e.g. India, South Africa, Brazil) are growing fast.  Trade facilitation led by the G-77 & China or BRICS (Brazil, Russia, India, China and South Africa), who often undermine LDC interest,  Little policy space for LDCs in global forum mislead the negotiation and taking the advantage of their interest  LDC yet to reap the benefit due to lack of infrastructural facilities (Power, Gas, Road & Connectivity)

LDC & Trade facilitation: Who gets the Bless?  Bangladesh is still an LDC for not fulfilling three criteria i.e.  Human Asset Index (HAI) score (met)  Economic Vulnerability Index (EVI) is 32.4 against the maximum acceptable level of 32.  Per capita GDP is US$ 1115 and to be  Bangladesh expected Trade Facilitation as an LDC but not happened due to US controversial role. Though Pakistan, Sri Lanka and Vietnam are getting privileges from US, UK and other developed countries in international trade even not being LDC.

Bangladesh in FTA & WTO Yet to way out for a suitable integration  No FTA so far with any country. Some proposal are under consideration.  GSP (General System of Preference) from EU: Can export everything but arms.  LDC group including Bangladesh is struggling for DFQF ( Duty Free and Quota Free ) access to the market of developed countries. Yet to be operationalized.

US-GSP for Bangladesh A case of Blackmail  Applicable for 97% of US import EXCLUDING garments and other products from Bangladesh  In 2013 Barak Obama suspended the GSP despite the garment export were NOT entitled for this facility  Higher tariff rate imposed on Bangladesh comparing to other developed countries:  France, UK and SA pay less than 1%  Bangladesh pay around 16% on average  Bangladesh pay around 60% of total tariff that US collect from LDC

EU-GSP: “Quality standard” a major challenge for SME development  Bangladesh garments export to EU drastically increased after “Multi Fiber Agreement-MFA” expired in Now it’s around 56.7% despite of global recession and negative impression on Bangladesh.  Non-Tariff Barrier like “Standard and Certification” process is a challenge, because:  Initial investment is too high.  Requires a better skilled labor force to fulfill their product requirement.  As a result, the SME might not be able to compete with larger counterparts.  Bangladesh need subsidized policy support (technical &financial) to maintain the process.

Garments industries in BD Contributors & Contribution  Employed 4.2 million people and majority from rural and women  Produce US$ 23 billion per year and source of 75-80% of the earned foreign currencies

Robust at cost of poor’s sweat & lives Weak infrastructure caused Factory collapse, fire and killed labors frequently  Spectrum Garments- 64 in 2005  Phoenix Group - 21 in 2006  Tajrin Fashion in 2012  Rana Plaza - 1,112 in 2013

Rights are denied  Very poor working environment  No rights for Trade Union  No Job Security, even no appointment letter sometimes  Physical/ Sexual abuse, forced to overtime work and no compensation.  Low wage ( US$ 59/month average, which is below the poverty level ) and Non-payment behavior

Who is liable for creating these Death Traps ? 3 Groups are identified in Home and Abroad 1. Owners Association (BGMEA) appears to be collective muscle to protect them from the law, even undermining the interest of labors. 2. Relevant govt. Agencies (Ministry of Industrial Development, Labor, Manpower and Employment, Social Welfare etc.) hardly able to show responsibility. 3. International buyers and brand retailers :  Offer very low price by exploiting the competition inside the country.  Cut price showing lame excuse of quality & standard or sale problem  Local Manufacturer and suppliers often take safety measure but reduce real wages & benefits of labors to keep their profit uncut.

Buyers Making profit without Investment  Buyers take 3-4 months for the payment after shipment. No or least investment. Poor labours kept unpaid for months.  grabs around 60% of total sale value as profit. Sale value is 4-5 times higher than production.  35% goes to the accessories and establishment cost  Only 1% is left for the labors.

Why these defacement in our garment sector?  Weak governance of state agencies  No or Little surveillance from both Owners Association (BGMEA) and Government  Greedy mentality of factory owners and  Survival in the competition.

Way out to establish Labor Rights and Recover Image  Compensation must for the victim of Rana Plaza and others. No less than their life time possible earning.  There is still a US$ 8 million shortfall in the agreed $30m fund for compensation by the buyers.  Govt. starts to disburse the compensation and already US$ 10 million paid.  Ensure minimum wage for garments workers, higher than poverty level income.  Compulsory group insurance facilities for workers.

Way out to establish Labor Rights and Recover Image  Ensure rights to organize; Workers must have the right of Trade Union to be able to claim their legitimate rights. Govt. already allows, but need to comply with ILO standard.  The global buyers must ensure Fair Price for imported garments to ensure fair wage.  Strong surveillance and monitoring to be paid from both owners association and govt. agencies.  Develop Garments Workers’ Database by both Govt. and BGMEA and accessible for all stakeholders.

Is safety measure possible for garments factories?  Accord and Alliance identified around 1000 factories need to restructure for minimum safety measures.  The cost could be US$ 375 million excluding building relocation.  Buyers and retailers need to increase the production cost. Only 50 cent increase per product may cover the whole restructuring expenses with increasing workers’ salary & benefits.  Govt. has reduced the Source 0.5% on garments export that would save US$ 500 million and easily cover the compliance cost.  Bangladesh govt. amended the Labor Law and provision includes the compliances where more than 100 workers employed.

Will WTO, FTA or Retailers ensure Labour Rights or Rightful Wages ? ?